Intermediate goods or producer goods or semi-finished products are goods, such as partly finished goods, used as inputs in the production of other goods including final goods. A firm may make and then use intermediate goods, or make and then sell, or buy then use them. In the production process, intermediate goods either become part of the final product, or are changed beyond recognition in the process. This means Intermediate goods are sold among industries for resale.
Intermediate goods are not counted in a country's GDP, as that would mean double counting, as the final product only should be counted, and the value of the intermediate good is included in the value of the final good.
If intermediate goods are included in GDP, these goods will be counted in the calculation of GDP, which leads to the imprecise result. Therefore, the value-added method can be used to calculate intermediate goods in GDP. This approach counts every phase of processing included in production of final goods.
Characterization of intermediate goods as physical goods can be misleading, since, in advanced economies, about half of the value of intermediate inputs consist of services.
Intermediate goods generally can be used in three different ways. The first way, a company makes and uses its own intermediate goods. The second way, a company manufactures internediate goods and sell them to others. The last way, a company buys intermediate goods to produce either secondary intermediate goods or final goods.
Video Intermediate good
Examples
- Sugar - sugar is used as a final good (when it is sold as sugar in the supermarket) or as an input (when it is used as an ingredient in other food products)
- Steel - a raw material used in the production of many other goods, such as bicycles.
- Car engines - Some firms make and use their own, others buy them from other producers as an intermediate good, then use them in their own car.
- Paint, plywood, pipe and tube, and ancillary parts.
- wood - wood is used in multiple purposes for construction of building or production of furniture
- glass - glass can be used to make dishes, cups, bottles or windows
- salt - salt is used in almost all food production
- silver and gold - silver and gold can be used for production of jewerly or kitchen utensils and even for food decoration or interior design
- An interesting example is the use of chlorine in the production of polyurethane, which contains no chlorine. Rock salt is electrolyzed to produce chlorine, which is reacted with carbon monoxide to give phosgene. Phosgene, a chlorine compound, and a diamine are then reacted to produce a diisocyanate and hydrochloric acid that is neutralized in situ. The chlorine is removed as chloride salt waste. The diisocyanate reacts with a diol to produce polyurethane, which contains no chlorine. Chlorine is used because chlorine is electronegative enough to produce an isocyanate, but does not become a part of the product; it lowers the atom economy.
Maps Intermediate good
See also
- Intermediate consumption
- Prefabrication
References
Source of article : Wikipedia
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